NFTs and F-NFTs throwing the traditional music market off balance - Report
The Crypto Journal - Issue 002
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The music industry has been in a state of upheaval for the past decade. The arrival of streaming services such as Spotify and Apple Music has disrupted conventional models, bringing artists to a broader audience while eroding profit margins for labels and musicians. Artists are becoming frustrated with unfair royalty rates, limited resources for marketing, and data mining by third-party companies that profit from their hard work.
Now, we're starting to see a similar effect with cryptocurrency and blockchain technology. NFTs are a new technology that could potentially be applied to the problem of making music profitable again.
NFTs? Again?
If you are reading this, you don't need an introduction, but, hey, here it is: an NFT is a digital asset made on the blockchain with a unique identifier giving it a certificate of authenticity and ownership.
🧪 Why it matters
We are still not there; it still does not make 100% sense to digitally sell music as an NFT because an mp3 it's not unique in a way or another.
The NFT phenomenon has been remarkable for (almost) every art type except for music. Of course, many singers, musicians, producers, and a few superstars hit the blockchain early. Still, very few sold digital audio material, as most of them sold tickets, album covers, unique cards, or weird fan items. (Checking with Grimes, Rolling Stones, or, of course, Kings of Leon).
What if artists could move entirely to the blockchain, selling an infinite amount of tokens for one piece of music? What if we could collect music directly on the blockchain, verifying the actual owner of the copyright, the song's uniqueness, or the real numbers? What if artists could finally earn some income from their craft?
🔍 Problem 1 - Shares
Much has been expressed regarding the unfair allocation of revenues in the music industry. The usual split goes like this: around 40% goes to the digital store, about 20% goes to distribution, 50% back to the label, and 50% for the composer/producer. In the case of streaming, the deal gets worse for the artist.
🔍 Problem 2 - Copyright
When minting an NFT, it is also essential that the creators understand what is being bought and traded. Unless otherwise declared, NFTs do not transfer the ownership of the copyrighted material therein. If a piece of music is featured in an audio-visual NFT, the arrangement and sound recording still belong to the original owner.
🔍 Other problems
Minting costs when working with Ethereum.
Minting on a different blockchain than Ethereeum doesn't give you exposure on OpenSea.
Limited amount of tokens issued.
SEC - Security. Subject to regulation.
💡 Solution - Fractional Ownership
Fractional Non-Fungible Tokens (F-NFTs) were initially designed in 2018 to offer shared ownership.
An original audio asset piece is impossible for everyone to own. (Same goes for an expensive piece of art).
Like purchasing stock in a company, new startups sell tiny bits of artists' music directly to fans. By buying some fractional copywriting data, fans can collect royalties based on the track's success. But it's not just music!
⚔️ Players
Fractional ownership for the music industry ⅝
Vezt - The First Music Rights Marketplace
Bluebox - Manage music copyright information in the blockchain
Royal - Collective ownership in music pieces
Buying audio-visual NFT 📼
Zora - Includes audio files
OneOf - Targeted to music
Mintbase - Some music superstars already selling their audios here
Rarible - Nice collection of music artists
Mintsongs - Simple as that.
Others ⚓️
Audius - Decentralized music sharing
Arpeggi - On-chain music creation platform (DAW)
Catalog - As they say: Not a streaming platform
📡 New projects & Opportunities
One of my favorite ones is Rally, a platform for creators and their communities to build their own independent digital economies.
Backed by Deadmau5 (again) is MODA DAO. It was developed to adopt Web3 in the music industry via NFTs, micro-licensing, DAO governance, and DeFi. Bonus: You can also invest in their token.
⛓ Dig deeper
NFTs for copyrights: Why non-fungible tokens could transform who gets paid from music rights and how
3LAU, one of the biggest influencers in the NFT space, is also a music producer. He founded Royal and started the project by sharing 50% of his track's copyright.
News
Deadmau5 & Portugal. The Man, are selling their new track on Mintbase. 502,723 tokens minted.
Royal gets $55M funding for their platform.
Mike Shinoda from Linkin Park released a new NFT mixtape after the success of his first 5000 items sales.
I am very interested in your opinions about the future of the music industry, so, don't hesitate to write me a comment.